With three European countries under emergency programs and tens of billions of dollars in IMF loans outstanding to them, Lagarde pledged not to show favoritism in future negotiations. France shares the euro with Greece and other troubled European economies, and its banks and other major institutions have a direct interest in seeing the crisis resolved.
Alessandro Leipold, who worked closely with Lagarde and her finance ministry staff as former head of the IMF’s European division, said it is important that she quickly establish her independence from the European powers that helped make her one of the world’s most influential women.
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June 28 (Bloomberg) -- French Finance Minister Christine Lagarde was named the new head of the International Monetary Fund, the organization said in Washington today. Peter Cook reports on Bloomberg Television's "Fast Forward." (Source: Bloomberg)
“She’ll succeed to the extent she divorces herself from the European nexus,” said Leipold, the chief economist at the Lisbon Council think tank. “She needs to cut the cord.”
Details of her contract were not immediately available. Strauss-Kahn earned about $440,000 annually.
The tone for Lagarde’s administration may be evident early. It is expected that she will follow tradition and appoint someone from the United States as her second in command, possibly David Lipton, a former IMF staff member and adviser to President Obama.
Her relations with large developing nations will be studied. As part of her campaign, Lagarde agreed that the IMF needed to better reflect a changing world economy in which Brazil, China and India are growing more quickly than developed nations.
That commitment may be seen through appointments, such as the possible elevation of Chinese national Min Zhu from his role as a special adviser to the more formal inner circle of deputy managing directors. Or it could come through a push for less European representation on the IMF board.
Although developing nations ultimately supported Lagarde, they were critical of a process that seemed over before it began, with Europe endorsing a favorite and the United States largely sitting on the sidelines to avoid a fight. Besides Carstens, Stanley Fischer, the governor of the Bank of Israel, sought the post, but his candidacy did not gain traction.
“Our expectation is that she will live up to two commitments: One is of evenhandedness and the other is a commitment to reform,” said Amar Bhattacharya, executive director of the G24 group of developing nations.
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